Intel 4Q earnings rise 6 percent, top St. estimate

NEW YORK (AP) — Intel Corp., the world’s largest chip-maker, on Thursday said its profit rose 6 percent in the latest quarter, topping analyst expectations, even as hard-drive shortages held back PC makers’ chip orders.

The Santa Clara, Calif., company also provided a forecast for the new quarter that matched analyst expectations.

Intel’s results, like Apple’s in recent quarters, have benefited from the economic surge in China and other developing countries, where many people are buying PCs for the first time. Intel processors go into about four out of five PCs built.

CEO Paul Otellini expects China to continue to drive Intel’s sales, noting on a conference call with analysts that the country’s is now the world’s largest PC market, even though just 35 percent of Chinese households have PCs. In the U.S., 90 percent of households have PCs.

At the same time, growing Internet use is driving demand for servers, where Intel processors are now the No. 1 choice as well.

However, Intel had to scale back sales expectations in the middle of the quarter because of disastrous floods in Thailand, which knocked out factories that produce hard drives and hard drive components. Computer makers cut production, and chip purchases, because of the parts shortages.

The latest results were at the high end of Intel’s mid-quarter forecast range.

Fourth-quarter net income was $3.36 billion, or 64 cents per share, up from $3.18 billion, or 56 cents per share, a year earlier.

Excluding last year’s acquisitions of security company McAfee Inc. and a unit of Infineon AG that makes modem chips for cellphones, Intel’s annual revenue grew 15 percent from 2010.

The company says it expects between $12.3 billion and $13.3 billion in first-quarter revenue, straddling the analyst forecast of $12.8 billion.

Intel is also gearing up for its biggest advertising campaign since 2003. This spring, it will promote “ultrabooks,” which are thin, light and powerful laptops in the vein of the MacBook Air. Intel has prodded PC makers to produce such models, and they’ve responded enthusiastically.

While Intel is stronger than ever on the PC side, it’s facing a new threat in the form of cellphone-style chips made by Texas Instruments Inc., Qualcomm Corp., Nvidia Corp. and others. These chips have taken the step from powering cellphones to tablets, and could be encroaching on Intel’s PC market next year.

To fight back, Intel is moving its chips into cellphones. Last week, it announced that Lenovo Corp. will be making an Intel-powered smartphone for China, and Motorola Mobility Holdings Corp. of the U.S. has committed to using Intel chips for smartphones and tablets.

Intel shares added 19 cents to $25.82 in extended trading, after the release of the results. Shares had risen 24 cents to $25.63 on Thursday.

For the full year, Intel had net income $12.9 billion on $54 billion in revenue. That was up from $11.5 billion on $43.6 billion in revenue in 2010.